SK Group Chairman Choi Tae-won, who actually controls SK Hynix, has seen his net worth double in the past year, driven by the rise in SK Hynix's stock price. (Bloomberg)
SK Group was formerly known as Sunkyung Group
[Financial Channel/Comprehensive Report] South Korean memory manufacturer SK Hynix (SK Hynix went public in the United States this year. As the demand for artificial intelligence (AI) surged, the entire memory industry structure was completely overturned, serious shortages occurred, and memory prices soared to record highs. SK Hynix became one of the biggest beneficiaries. Choi Tae-won, the chairman of SK Group who actually controls SK Hynix, has also become the focus of the market. Driven by the rise in SK Hynix's stock price, his worth has doubled in the past year.
But what attracts the most attention to Choi Taiyuan is the divorce lawsuit between him and his ex-wife Noh So-young that has been going on for many years. The judge ruled in the second instance on July 24 this year that Choi Taiyuan must pay Noh So-young 944 billion won (approximately) in the property division. NT$21.53 billion), however, Cui Taiyuan proposed to pay in cash with stocks, but Lu Suying asked for all cash, which led to the two parties not being able to reach an agreement, because Cui Taiyuan himself is a member of SK Hynix’s parent company SK Group (SK Group). Group), and controls SK Hynix through the group's holding company SK Square. However, the soaring share price of SK Hynix has made this a major issue. First of all, the timing of stock price calculation is the main factor affecting the amount, and it is also related to Cui Taiyuan's control over the group. Due to the issue of asset division, Cui Taiyuan has appealed at the last minute. This litigation battle that has lasted for more than 9 years still has to be fought.
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Korean chaebols have a strong sense of family rule, and SK Group is no exception. Its predecessor was Sunkyong Group. Choi Tae-won, who was born in 1960, is the eldest son of Sunkyong Group Chairman Choi Jong-hyun and the nephew of Sunkyong Group founder Choi Jong-geon. After Choi Jong-hyun passed away in 1998, Choi Taiyuan was appointed chairman of SK Group at the age of only 38. Core control has long been firmly in the hands of the founder Choi family.
Choi Tae-won graduated from the Physics Department of Korea University, and then completed an integrated master's and doctoral program in economics at the University of Chicago. After returning to Korea, he joined the SK trading department and became vice president. Although the outside world was worried about a succession dispute at the time, Choi Yoon-won, the president of SK Chemicals (SK Chemicals) and Choi Jong-gun's eldest son, recommended Choi Tae-won to take over, saying "Tae-won is the best among our brothers." In the end, the succession plan was unanimously agreed.
Through multiple corporate mergers and acquisitions, Choi Taiyuan expanded SK Group's business scope from petroleum refining and telecommunications to the semiconductor and biotechnology industries. His decision to acquire SK Hynix in 2011 further allowed SK Group to grow into South Korea's second largest chaebol. It is said that during the acquisition of SK Hynix, there was opposition within the group due to the costs and risks of the new business, but Choi Taiyuan still strongly promoted the transaction. In February 2021, Choi Taiyuan became the first person among the leaders of South Korea's four major chaebol groups to serve as president of the Korea Chamber of Commerce and Industry (KCCI).
Cui Taiyuan himself has been imprisoned many times for accounting fraud and embezzlement of public funds. The picture shows him being summoned by the prosecutor in 2011. (Reuters)
Choi Tae-won has been imprisoned many times
Cui Taiyuan himself has been imprisoned many times for accounting fraud and embezzlement of public funds. In 2003, he was sentenced to 3 years in prison for accounting fraud, but he was released on bail after serving 7 months. In 2008, he was pardoned by then President Lee Myung-bak. But in 2013, Cui Taiyuan was accused of embezzling public funds. In 2014, he was sentenced to four years in prison and imprisoned. However, he was pardoned by then President Park Geun-hye after serving 926 days in prison and returned to the core of SK Group's power.
Choi Taiyuan attracted the most attention from the outside world because of his marriage to Noh So-young, the daughter of former South Korean President Roh Tae-woo. Choi Taiyuan and Noh So-young got married at the Blue House in 1988. The two had three children. However, it was later revealed that Choi Taiyuan had an affair and had an illegitimate child. Cui Taiyuan publicly admitted the matter in 2015, and filed for divorce from Noh So-young in 2017. After mediation failed, she entered litigation. Noh So-young initially refused to divorce, but changed her position in 2019 and agreed to the divorce but requested the division of Cui Taiyuan's property. The two parties officially launched years of litigation and defense.
The biggest disputes in the case focus on whether the SK Group shares held by Cui Taiyuan are joint property of the husband and wife, and whether Noh So-young's contribution to the development of the family and business during the marriage should be reflected in the distribution of property.
Lu Suying initially requested 300 million won (approximately NT$6.843 million) in alimony and 6.48 million shares of SK Group, which was nearly half of Cui Taiyuan's shareholding, which was worth approximately 1.3 trillion won (approximately NT$29.65 billion) at the time. However, the negative The Seoul Family Court, which was responsible for the first instance, rejected Noh So-young's request in 2022 and supported Cui Taiyuan's claim, that is, Cui Taiyuan's assets came from inheritance and gifts, and Noh So-young did not make a contribution, so Cui Taiyuan did not need to divide the shares of SK Group.
Both parties subsequently appealed the first-instance verdict. During the appeal, Lu Suying increased the alimony requirement to 3 billion won (approximately NT$68.43 million) and the property distribution to 2 trillion won (approximately NT$45.62 billion). Roh So-young's legal team claimed that Roh Tae-woo provided funds to SK Group in the 1990s to acquire SK Securities and Korea Telecom, which later became part of SK Group and SK Telecom. As the president's son-in-law, Choi Tae-won played a very important role in the development of SK Group. Noh So-young herself also contributed to the development of SK Group.
Although Choi Tae-won's legal team denied the above statement, the Seoul High Court in charge of the second instance held in 2024 that Noh So-young did contribute to increasing the value of SK Group and management, and the shares of SK Group should be distributed fairly, so a ruling was made The ruling in Noh So-young's favor held that Cui Taiyuan must pay 2 billion Korean won (approximately NT$45.62 million) in alimony and distribute 1.38 trillion won (approximately NT$31.47 billion) in property, which was approximately 36% of Cui Taiyuan's net worth at the time.
The whole case was sent back for a new trial after appeal. In July this year, the judge ruled that Cui Taiyuan must pay Noh So-young 944 billion won, but Noh So-young asked for all the money to be paid in cash. According to South Korean legal circles, Choi Taiyuan originally planned to accept the judge's decision, but it was difficult for him to raise it in a short time. 944 billion won in cash. Although he has considered selling some SK Group shares, Choi Taiyuan is worried about the impact this will have on the stock price and corporate management, so he appeals again. It is speculated that Choi Taiyuan will seek a payment plan that is more favorable to him from the judge.
Choi Tae-won and his ex-wife Noh So-young's divorce lawsuit has been going on for many years. (European News Agency)
Choi Tae-won claims that SK shares are inherited income
The skyrocketing share price of SK Hynix has also put the asset division situation in Cui Taiyuan's divorce case into a big problem, and it is also related to Cui Taiyuan's control over the group itself.
SK Square, an investment company under the SK Group, held 20.5% of SK Hynix's shares as of March 31 this year, making it the company's largest single shareholder. It is worth noting that SK Square’s largest shareholder is SK Group, and SK Group’s largest shareholder is Cui Taiyuan.
According to South Korean law, property division should be based on the proportion of the spouses' contributions to the joint property, rather than automatic division. Due to the skyrocketing stock price of SK Hynix this year, Cui Taiyuan believes that the SK Group shares held by Cui Taiyuan are personal property obtained by inheritance or gift, and the asset value on April 16, 2024 (the date of appeal hearing) should prevail. Lu Suying's side believes that these properties are common property and should be valued at a price much higher than the current price.
Although Cui Taiyuan has appealed against the divorce case and the final amount of property division has not yet been determined, he still chose to sell 1.653924 shares of SK Group in October this year, equivalent to 2.3% of the issued shares. It is said that Choi Tae-won will secure 944 billion won in funds through the share sale, which is equivalent to the amount of divorce property divided by the court. It seems to be to cope with the capital needs that may be as high as 944 billion won.
After the transaction is completed, Cui Taiyuan's shareholding ratio in SK Group will drop from 17.8% to 15.5%. If special related persons are included, the shareholding ratio will drop from 25.2% to 22.9%. An SK Group executive explained, "This equity change is intended to respond to the largest shareholder's personal financial needs related to property division litigation." Although the shareholding ratio fell after the completion of the transaction, Cui Taiyuan's status as the group's largest shareholder remained unchanged.
In terms of voting shares, Cui Taiyuan's shareholding ratio will drop from 23.9% to 20.8%, and when special related persons are included, the shareholding will drop from 33.5% to 30.5%. SK Group pointed out that the relevant transactions are expected to have limited impact on SK's governance structure and management control, because the voting rights including special related persons are still 30.5%.
Although the shareholding ratio dropped after the completion of the transaction, Choi Taiyuan's status as the largest shareholder of SK Group remains unchanged. (Bloomberg)
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